Time & Money

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It’s about time!

There are three factors that will affect your future financial success:

  1. How much you set aside for your future
  2. The rate at which your money grows, after taxes and inflation
  3. How long do your saving before you retire

These three factors are related!

For example, if you achieve a higher rate of growth than you expected, you probably won’t have to save as much to reach your goals. However, if your returns are less than you expected, you either won’t reach your goals or you’ll have to save more money than you had planned. It’s worth noting that many pension plans, both private and public, throughout the U.S. are having trouble meeting their obligations because they didn’t set-aside enough money based on projected rates of return that didn’t materialize. As the Chief Executive Officer of your own individual investment company trying to achieve a secure retirement income for yourself, you don’t want to fall into this trap.

While these factors are related, they’re not alike!

How much you save: This can be adjusted up or down, though most people do feel limited due to other obligations, i.e., saving for college, paying a mortgage, property taxes, medical bills, and all the other things that place demands on income and assets. But you do have some control over this factor.

Rate of return: This can be adjusted up or down, as well; but you have little to no control since the marketplace determines the value of assets, including even the interest you receive on bank accounts. Even as interest rates rise, achieving a positive real return – after taxes and inflation – can often prove problematic. Even a ‘guaranteed’ rate that may look good today could look bad tomorrow in a high-inflation environment, especially if governments (national, state, and local) find additional ways to take your money, whether at the gas pump, the checkout, or through other assessments.

Time: This is the ONLY factor YOU can control. There’s a catch: It’s also the ONLY factor that doesn’t expand. Time only decreases. Yes, you can work longer provided your health continues to be good and you’re able to either find work or start a business; but, it’s worth noting a lot of Harvard MBAs are out of work and the odds of making a business succeed are against you at any age, let alone post retirement. Even if you work past 65, how far past 65 can you work? While some work even to age 80, you may not want to count on it.

Interested in becoming an IFG client?  Why play phone tag?  Schedule your 15-minute introductory phone call!

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

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20-Minute “Right Fit” Introductory Call Now!

Jim's picture
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.

Schedule Your 20-Minute
“Right Fit” Introductory Call Now!